ALEX BRUMMER: EU is in cloud cuckoo land approving Microsoft deal
EU in cloud cuckoo land: Brussels’ decision to switch to Microsoft is a blow to free markets and creativity, says ALEX BRUMMER
Microsoft boss Brad Smith’s blistering attack on Britain after the independent Competition and Markets Authority blocked his £55bn deal with Call Of Duty gaming giant Activision is hard to forgive.
The brash American will be delighted that his powers of persuasion met with greater success in Brussels, where he was more confident in approval.
The European Commission’s decision to roll out is a major victory for Microsoft and its target.
In the recent past, the EU has been no friend of big tech, imposing hefty fines on Apple and regulations such as the GDPR.
The 27 members of the EU, especially France, have waged an all-out war against the tax avoidance of major tech companies in Europe.
Game on: European regulators have approved Microsoft’s £55bn mega merger with Call Of Duty maker Activision Blizzard – weeks after it was blocked by the UK’s competition watchdog
Perhaps it would have been easier for Microsoft to convince the EU that the deal would be less damaging to the EU-27 because it has less skin in the game.
The UK is one of the world leaders in video game making and also has the artificial intelligence (AI) know-how to take gaming to the next level through companies like DeepMind (owned by Alphabet).
Microsoft triumphed in Brussels with the promise that Activision games would be available to everyone for streaming on cloud platforms, minimizing the threat of competition.
Attractive as this proposal may seem, it ignores the burgeoning power that Microsoft wields through its dominant operating systems.
It’s interesting to note that US chipmaker Nvidia’s proposed acquisition of Cambridge-based Arm was all but blocked by the US Federal Trade Commission.
It was concerned that Arm’s open access to its advanced semiconductor designs would not be fairly distributed.
As the UK knows to its price, in the fog of takeover fever, promises made to regulators and governments are rarely robust enough to withstand the forces of dominant players. The EU decision is a blow to free markets and creativity.
Disappearing act
Crude oil has been down for nearly a month, with benchmark Brent trading at nearly $75 a barrel.
At these levels, oil is trading at pre-Ukrainian levels, which should be good for drivers and inflation prospects.
It is less helpful to Keir Starmer and Labor, who choose to base much of their fiscal policy on the idea that there is a pool of cash to be drawn from windfall taxes on big oil.
Shadow Chancellor Rachel Reeves estimates a potential £13bn could be reaped if the ‘fossil fuel investment loophole’ is closed and the levy is retroactively introduced. That would discourage confidence in UK plc.
Reeves says the revenue would be used to subsidize energy bills. Starmer has already earmarked some of his funding for freezing council tax bills.
That all sounds great, but is naive and ignores Treasury tax conventions.
Energy prices fluctuate enormously and so do the windfalls. They are gone today and tomorrow as we see with prices at their lowest since 2021.
In addition, British governments generally do not tax retroactively. The concept of a loophole in fossil fuel investment is curious. Yes, BP, Centrica and global players are allowed to write off part of the cost of oil exploration and drilling in the North Sea.
At a time when the West has been held hostage by Russia as an energy supplier, and real incomes have been swamped by higher energy and food prices, fossil fuel exploration is being encouraged as an insurance against the next time Russia and Saudi Arabia run into trouble. be encouraged. Labour’s loophole is actually a free market incentive.
If Starmer and Reeves are serious about making the UK the fastest growing economy in the G7, discouraging investment and imposing back taxes will defeat the ambition.
Smoking gun
British American Tobacco (BAT) acted with impressive speed in shedding one CEO and hiring another.
Brazilian Tadeu Marroco takes charge in the aftermath of BAT’s confrontation with US authorities over sanctions circumvention in North Korea.
Marroco’s job will be to cash in on the sales gains BAT makes through vaping and e-cigarettes in the US market.
The group has been in breach of UK ethical investing rules for decades, but remains a reliable FTSE 100 dividend payer.
Since it revolves around more acceptable products, it would be a loss if it shifted its share price to New York after a century in London.